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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiffs products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiffs trademarks in meta tags of website at which plaintiffs and its competitors products are sold, and in...

Bidbay.com v. Bruce Spry, Jr.

B160126 (Cal. Crt. App., March 4, 2003)

Court denies defendant's motion, brought under California Code of Civil Procedure Section 425.16, to strike defamation, disparagement and intentional interference claims arising out of statements defendant allegedly made in Internet chat rooms. Defendant sought to strike these claims on the ground that they were advanced to inhibit his criticism of plaintiff in violation of Section 425.16, which provides protection against "Strategic Lawsuits Against Public Participation," otherwise known as SLAPP suits. While the Court found that defendant's chat room comment were entitled to protection under Section 425.26, it held that plaintiffs had proffered sufficient evidence in support of the validity of their defamation claims to be permitted to proceed therewith.

Plaintiff Bidbay.com ("Bidbay") is an Internet auction site who's CEO is plaintiff George Tannous ("Tannous"). Plaintiffs claim that defendant anonymously made defamatory statements about plaintiffs in an Internet chat room. The statements claimed that "Bidbay sells child pornography and Tannous failed to file or pay income taxes." The statements were apparently made in a chat room operated by Auctioncow.com, a competitor of Bidbay, as well as posted on message boards operated by both Bidbay and Auctioncow. Tannous alleged that he tried to respond to these statements in a particular chat room, but was 'locked out' and accordingly denied access.

"Section 425.16 provides a procedure for the court 'to dismiss at an early stage nonmeritorious litigation meant to chill the valid exercise of the constitutional rights of freedom of speech and petition in connection with a public issue.'"

Under the statute, causes of actions arising out of an act of a person in exercise of that person's constitutionally protected rights of petition or free speech in connection with a public issue are subject to a motion to strike unless the plaintiff can establish a probability of prevailing on the claim. Under the statute, acts in furtherance of free speech include "any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest." The statute is to be broadly construed.

The court held that a defamation claim arising out of negative statements, made in an Internet chat room about products an Internet auction company allegedly marketed was a cause of action arising out of the exercise of free speech rights concerning a matter of public interest, and hence subject to the strictures of California's anti-SLAPP statute.

In reaching this conclusion, the court held that an Internet chat room, where participants did not have an unfettered right to speak as they pleased, was a public forum within the meaning of the statute. Said the court:

In order to qualify as a public forum, a computerized chat room need not provide information on all sides of an issue. It is enough that it be open to public or a large segment of the interested community to examine, and that those who disagree have other forums available for expression of opposing viewpoints.

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As the court stated in Damon: "Read in context of the entire statutory scheme, a 'public forum' includes a communication vehicle that is widely distributed to the public and contains topics of public interest, regardless whether the message is 'uninhibited' or 'controlled.'" (Damon v. Ocean Hills Journalism Club, supra 85 Cal.App.4th at p. 478.)

The court further held that negative statements about the products sold by an Internet auction company were a matter of public interest within the meaning of the Act. Said the court:

"[T]he definition of 'public interest' within the meaning of the anti-SLAPP statute has been broadly construed to include not only governmental matters, but also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity."

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Legitimate information that an Internet auction site is dealing in child pornography would be of interest to the thousands of users and potential users of the site who could not possibly wish to have their merchandise listed alongside contraband. It would also be of interest to the millions of customers who have considered purchasing an item on an auction site, but would never support a business that engages in conduct that is both illegal and despicable. More importantly, public exposure and financial ruin for those who would support this horrific conduct would help stamp out a scourge to society, and so is of considerable benefit to the public at large.

The court nonetheless found that plaintiffs had shown sufficient probability of prevailing on their defamation claim to be permitted to proceed therewith. In this regard, the court found that plaintiffs had submitted sufficient evidence as to the nature of the statements made, the fact that they were attributable to plaintiffs and their falsity.

In reaching this result, the court rejected defendant's claim that the lawsuit was motivated by plaintiff's desire to stop defendant from continuing his legitimate criticism of plaintiff's activities, and the services they rendered their customers. Such motivation is irrelevant to the Court's determination, which focuses instead on the nature of the challenged acts and the merits of the claim advanced in connection therewith. Said the court:

[W]hile it may be that respondents' subjective intent in bringing the lawsuit was to shut down a persistent gadfly, the Supreme Court has made clear in several cases that motivation and subjective intent are irrelevant.

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The complaint herein is not based on the fact that appellant made complaints about Bidbay's service and pointed out alleged glitches in its program. It is based on completely unrelated allegations that defamatory statements were made charging sale of child pornography and income tax fraud. For purposes of a Section 425.16 motion to strike, we are bound to ignore the possibility of improper motivation or intent due to the Supreme Court's explicit holdings in Equilon and Cotati.